Pre-Tax Profits Rise At Private Banking Arm Of HSBC

Pre-tax profits at the global private bank of UK/Hong Kong-listed HSBC rose by 7 per cent year-on-year to $1.01 billion, while this unit logged net operating income, before impairments, of $3.172 billion, down from $3.292 billion a year ago.



On a constant currency basis, HSBC later told this publication, pre-tax profits rose by 8 per cent from 2011.



The parent bank, meanwhile, today reiterated its apology for the breaches of anti-money laundering rules in the US and Mexico. In December last year, HSBC was fined $1.9 billion by UK and US authorities for infractions and has enacted measures as a result.



“For well-documented reasons, the last two years have been extremely damaging to HSBC’s reputation and to our perception of ourselves. We faced serious failings both in the application of our standards and in our ability to identify, and so prevent, misuse and abuse of the financial system through our networks,” Douglas Flint, chairman, said in a statement today.



“Our strategy is entirely configured to eliminate the possibility of this happening again. We have apologised unreservedly to all our stakeholders and have paid huge penalties both in monetary cost and reputational damage. More important than apologies, however, are the steps being taken to prevent recurrence,” he said.



Flint noted that HSBC in January created a new board committee, the Financial System Vulnerabilities Committee, which provides governance, oversight and policy guidance over the framework of controls and procedures designed to spot areas where HSBC may become exposed and, through that exposure, expose the financial system more broadly to financial crime or system abuse.



Parent results

The parent bank logged a pre-tax profit of $20.6 billion, down by 6 per cent on 2011. That figure included the impact of $5.2 billion of adverse fair value movements on HSBC’s own debt. Underlying profit before tax, which takes account of the US and UK legal actions and fines, was $16.4 billion, a rise of 18 per cent on a year before. (A Reuters’ poll of analysts gave a pre-tax profit forecast of $22.7 billion.)



The bank had a core tier 1 capital ratio, under the international Basel rules, of 12.3 per cent, up from 10.1 per cent at the end of 2011.



HSBC declared dividends per share for 2012 of $0.45 per ordinary share, up 10 per cent on 2011, with a fourth interim dividend for 2012 of $0.18 per ordinary share. Total dividends paid amounted to $8.3 billion.



The bank, which has been shedding some businesses and exiting operations to contain costs and boost profitability, noted that in 2012, it announced the disposal or closure of 26 businesses and non-core investments, and four in 2013, bringing the total of such moves to 47 since the start of 2011.



The bank said it generated further cost savings of $2.0 billion, giving an annualised total saving of $3.6 billion. This figure surpasses HSBC’s cumulative target of $2.5 billion to $3.5 billion of sustainable savings since 2011.



On a geographic breakdown of the results, Europe posted a pre-tax loss of $3.414 billion, while Hong Kong accounted for $7.582 billion, other Asia-Pacific at $10.448 billion; Middle East and North Africa at $1.35 billion; North America at $2.299 billion, and Latin America at $2.384 billion.



“The majority of our core businesses in Asia, particularly in Hong Kong, continued to perform well, achieving good underlying revenue growth in the year,” Flint said in the statement.



Board change

One new board change announced today was the appointment of Jim Comey, to serve on the newly-created Financial System Vulnerabilities Committee. He acted as general counsel to several international businesses. Between 2003 to 2005 he was US Deputy Attorney General.





































Source: wealthbriefing



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